Australia says it's ready to join China's new bank, but wants to know how much power Beijing would have

China's Finance Minister Lou Jiwei gives a speech, with the guests of the signing ceremony of the Asian Infrastructure Investment Bank at the Great Hall of the People in Beijing Thomson Reuters SYDNEY (Reuters) - Australia is "well and truly" disposed to join the China-led Asian Infrastructure Investment Bank (AIIB), Prime Minister Tony Abbott said on Wednesday, but wants to know how much power Beijing would hold in the institution before a formal decision.

Fairfax Media citing government sources, reported the federal cabinet has approved Australia signing a "memorandum of understanding" on joining the AIIB.

Australia, South Korea and Japan are the notable regional absentees from the bank, which the United States had warned against. Despite Washington's misgivings, U.S. allies Britain, France, Germany and Italy announced this month they would join the bank, leading the Obama administration to reassess its stance.

China's Xinhua news agency has said Beijing will not hold any power of veto in the bank.

The AIIB has been seen as a significant and possibly historic setback to U.S. efforts to extend its influence in the Asia Pacific region to balance China's growing financial clout and assertiveness.

Although Australia is a vital part of Washington's strategic "pivot" toward Asia, it is close to joining as well.

"We are certainly well and truly disposed to joining something which is in fact a genuinely multilateral institution with transparent governance, clear accountability and with major decisions made by the board," Abbott told reporters.

"That is really the fundamental thing for us, would major decisions be made by the board and is it going to be a multilateral institution rather than one that is controlled by any one country," he said at a news conference in Canberra.

Japan, however, is cautious about joining while South Korea has said it is yet to decide.

Tokyo "does not need to sign in" on joining the bank unless China lays out clear rules on when and what conditions it will provide loans, Finance Minister Taro Aso said on Tuesday.

Abbott said he has discussed the matter with U.S. President Barack Obama and Japan's Prime Minister Shinzo Abe and would continue talking to them.

Speaking to the Australia China Business Council, Treasurer Joe Hockey said it was important to secure the country's best interest in a well governed bank that will work to promote greater infrastructure and growth in the region.

"If well designed, the AIIB could play a key role in helping to address the region's acute infrastructure needs. In order to do this we will need a strong and well governed AIIB," he said.

"It is early days for the AIIB, but China has made strong progress on governance so far. The proposed governance arrangements will be modeled on international best practice."